Challenges in Supply Chain Management

by David Berrios, Class of 2014Thursday, March 6, 2014

Current supply chains are growing in complexity due to several factors. We, the customers, are demanding innovative products at the right time and at a reasonable price. This creates challenges for companies since creating both responsive and cost-effective supply chains is critically difficult. I find these challenges exciting and that’s why I decided to pursue a career in the field. Let me expand on today’s main supply chain challenges.

GlobalizationOne of the biggest challenges that companies are facing is how to reduce their supply chain cost. In order to satisfy customers’ price expectations, companies have opted to relocate manufacturing to low cost countries around the world in an effort to reduce direct and indirect costs and to minimize taxes. But, having global suppliers contributes significantly to complexity that comes from extended delivery lead times. Customers not only want lower prices, but they also want their products on time.

Customer PreferencesAs stated above, global supply chains are complex. Add to that product features that are constantly changing, and the challenge is even greater. A product is released and customers rapidly pressure companies to come up with the next big thing. Innovation is important since it allows companies to stay competitive in the market, but it’s also a challenge. To enhance a product, companies have to redesign their supply network and meet market demand in a way that’s transparent for customers.

Market GrowthAnother factor that presents a challenge is the pursuit of new customers. The cost of a developing a product, from R&D to product introduction, is significant. Therefore, companies are trying to expand their distribution to emerging markets in order to grow revenues and increase market share. Companies all around the world are expected to expand in their home and foreign markets. The introduction to new markets is difficult due to trading policies, fees, and government policies.

Customers’ expectations nowadays are more demanding than ever. As described here, companies have responded with global networks, product innovation, and market expansions. This means that companies now rely on supply chain managers to optimize their value chains in order to stay competitive. As such, it’s no surprise that these professionals are in high demand. So customers, rest assured - experts in supply chain management, including our own Grainger Center graduates - are behind the scenes tackling these complexities each and every day and are eager to delight the customer experience.